Whether you're looking towards the future or you've already hit the "golden-days" of retirement, cost containment and putting your money to work for you is critical to maintaining the retirement lifestyle that you desire.
Here at Paradise Energy, we get asked all the time, "Is investing in solar energy a smart move for my retirement?" To get an unbiased answer to this question, we turned to Ray Stark, a Financial Associate at Thrivent. Ray shares his expert thoughts from years of helping many people achieve their financial goals.
Without further ado, below our Ray's answers to a series of questions we asked him on this topic.
Why would someone want to consider a solar energy system as part of their retirement strategy?
A well-planned retirement strategy begins by looking at your needs, wants and dreams for the future. Your retirement is unique, so consider working with a financial professional to help you develop a comprehensive strategy that accounts for your specific goals.
As they plan for the future, some individuals may be interested in exploring the ways they can protect the environment. For them, a solar energy solution might be an ideal fit for their future financial strategy and the costs and risks might be secondary if it means helping the environment first.
Others may be interested in this option if it means decreasing some expenses in retirement. Solar energy may provide an avenue where they can decrease their utility costs in retirement by purchasing a solar energy system prior to retiring. This would be a similar concept to paying off your home before you retire so that your expenses would be lower in your retirement years.
Finally, a solar energy solution may provide a possible tax break. This tax break could offset taxes owed by having to take RMDs (required minimum distributions) from retirement accounts. Be sure to work with your tax advisor to learn more about the possible benefits.
What would be some of the pros of including solar in a retirement strategy?
There are many benefits to considering solar as part of your financial strategy, including how it may help you save during retirement.
One would be the ability to lower your electricity bills in your retirement years. At a time in life when people are living on a fixed income, lowering costs could be beneficial.
Another positive benefit might be the potential impact on the value of the property and the resale appeal of the home when it’s ready to be sold in the future. However, it’s important to note that real estate markets vary greatly and what may be considered desirable in one area might not be desirable in another.
What would be some of the cons of including solar in a retirement strategy?
As with any financial strategy, the benefits always need to be considered alongside the risks. Any maintenance or upkeep of the system should be factored into your plan.
With people living longer today compared to previous generations, you should prepare for the possibility that the system may need to be repaired or replaced in your later years. Although most systems come with a long warranty, there is still the potential of “outliving” the system. A sound financial strategy will have to account for this.
If the cost of the initial system and installation would come from your retirement assets, you should consider whether a different investment would provide a greater ROI (return on investment).
What advice would you give someone who is considering solar and plans to retire in 5 or 10 years?
Sit down with a financial professional to discuss the possibility of including solar as part of your financial strategy, including your retirement. A financial professional can help you determine if solar is a good fit based on your goals and objectives. They may also be able to help you determine whether the time is right to purchase the system. For example, they may ask you if you’re planning to move to another home in retirement or if you’ll stay in your current home (and if so, for how long).
Answering these questions and others will help determine the right timing. Although financial advisors do not give tax advice, they can educate you on the best timing for implementing solar for the best tax benefit. They can also help you consider how solar might fit with your overall goals in retirement.
Final thoughts on solar and retirement?
Solar is ultimately an individual decision. As with any financial strategy, you should take time to weigh the pros and cons, evaluate the costs and risks, and factor in the timing and tax implications. Consider speaking with a financial professional and tax advisor to guide you through the decision-making process. Then, if it’s a right fit for you, enjoy the new solar energy system and the benefits it can provide!
Thrivent and its financial professionals do not provide legal, accounting or tax advice. Consult your attorney or tax professional.
About Thrivent
Thrivent is a diversified financial services organization that helps people achieve financial clarity, enabling lives full of meaning and gratitude. As a mission-driven, membership-owned organization, it offers its more than 2 million members and customers a broad range of financial products, services and guidance. Thrivent and its subsidiary and affiliate companies offer insurance, investments, banking and advice over the phone, online as well as through financial professionals and independent agents nationwide. Thrivent is a Fortune 500 company with $152 billion in assets under management/advisement (as of 12/31/19). Thrivent carries an A++ (Superior) rating from AM Best, a credit rating agency; this is the highest of the agency’s 16 ratings categories and was affirmed in May of 2020. For more information, visit Thrivent.com. You can also find us on Facebook and Twitter.
Thrivent is the marketing name for Thrivent Financial for Lutherans. Insurance products issued by Thrivent. Not available in all states. Securities and investment advisory services offered through Thrivent Investment Management Inc., a registered investment adviser, member FINRA and SIPC, and a subsidiary of Thrivent. Licensed agent/producer of Thrivent. Registered representative of Thrivent Investment Management, Inc. Advisory services available through investment adviser representatives only. Thrivent.com/disclosures.
If you have more questions for Ray, connect with him on Facebook or Linkedin.
To take a look at what a solar investment could look like for you, use the button below to request a custom quote. We will provide you with detailed information about the financial return for a system that fits your needs. This is perfect information to review with your financial advisor.
